Ad Guidelines, Unicorns, and Other Myths

Recently, several online advertising trade associations decided to clarify the standards by which Internet advertising is measured, something they thought long overdue. With the participation of eight prominent Web publishers and two advertising technology firms, the groups got together to establish guidelines and came up with five crucial measures to gauge Internet marketing: ad impressions, clicks, page impressions, total visits, and unique visits.

As reported in The New York Times, the 10 participants creating the specifications together represent nearly two-thirds of total online advertising revenue. According to a separate report in AdAge, “the much-needed guidelines, five years in the making, will try to eliminate inconsistencies among online publishers and agencies as to how to count ad impressions and improve overall methods of calculating traffic on Web sites.”

If you’ve survived this long in online data analysis, you probably don’t need me to tell you that these “much-needed” guidelines are probably not.

After five years of Web marketing, only a fool or a shill would argue that Web advertisers suffer from an inability to define the terms by which they are measured. The measuring stick is apparent. The problem is that Web advertising often doesn’t measure up.

The trade associations, in defining terms that are by now self-apparent to Web marketers, either miss this point or pretend it doesn’t exist. It’s sort of like rearranging the deck chairs on the Titanic.

The real debate in online advertising has moved well beyond differentiating between things such as total visits and unique visits. Most knowledgeable buyers of Web advertising measure it by the number of new customers they get and the lifetime value of those customers. If you click on a Columbia House banner on Yahoo and sign up, you can bet that the smart marketer at Columbia House will be looking at the value she expects to generate from you versus the money she paid for the ads.

No, the real question is not the metric but whether Web advertising can perform against any metric at all. Take the words of Barry Diller, who, when asked this week whether his USA Interactive would consider acquisitions of ad-supported online businesses, expressed doubt that the Internet should be an advertising medium.

Diller didn’t say it was a tough environment for online advertising. Instead, he questioned whether online advertising should exist at all. And rightly so. Online advertising has yet to prove that it can be a sustainable business. The notable exceptions have yet to prove themselves over the long haul. It remains to be seen whether advertising can survive long enough on the Web for technological developments such as broadband to come around and perhaps resuscitate it.

Meantime, smart marketers will continue to focus on the transaction — on getting consumers to transact — and on increasing the value of acquired customers over time. The best marketers aren’t wasting time on definitions but, rather, focusing on what works to build successful online businesses.

Take Diller’s USA Interactive. The firm has cobbled together a closely intertwined network of transaction-driven engines. The disparate properties — ranging from Ticketmaster to the Home Shopping Network to Citysearch and now including Expedia — all come together to make a sum that is larger than its parts. Each feeds customers to the next, and all leverage scale advantages in building things such as a universal customer database, aimed at upselling and cross-selling to customers in perpetuity. Diller’s empire proves that the medium can be successful if it is managed as a channel for transactions rather than a passive advertising medium.

Whether you’re into building empires or just making sense of your customer data, you’ll do well to ignore any guidelines except one: the bottom line.